Retailers must do more than replicate domestic offer in overseas markets, study finds

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Retailers who are looking to expand their online presence into other geographies will have to do a lot more than just replicate their existing consumer offer if they are to overcome considerable barriers to buying from ‘foreign’ sites. Failure to do so will mean potentially missing out on lucrative markets where online shopping is either still relatively new or uptake is low.

These are the findings of the fourth annual industry research from consumer delivery specialist Hermes, which for the first time included 1,000 responses from consumers in both Russia and Germany, in addition to 1000 in the UK.

The 2013 Parcel Deliveries Usage and Attitude Survey found there were strong differences in consumer attitudes across the three countries with regard to security, payment, marketing and communication that impacted their online buying habits and would prevent them purchasing. As a result, the numbers of consumers prepared to buy regularly online from whom they perceived to be a foreign retailer were extremely low – just 2% in Germany and 9% in the UK. The figure was higher in Russia at 24%. 

Over 50% of all respondents were put off by high delivery charges and the difficulty of returning faulty or unwanted deliveries. There were also high levels of concern around potential credit card fraud, whether the goods would actually arrive and how long delivery would take. Over a third felt that sorting out any issues or problems would be too difficult.

There were also strong differences around payment methods with many respondents in Germany being used to receiving an invoice after receipt of their purchase and over a third of all Russian respondents used to paying cash on delivery. PayPal was relatively popular in all three countries.

Gary Winter, sales & marketing director at Hermes UK, said: “The research shows there are phenomenal growth opportunities for retailers overseas but they need to get it right. Certainly one size does not fit all and meeting the vastly different consumers’ requirements on all aspects of the service is key.”

The survey found the UK has the highest number of frequent online shoppers (those that had purchased three or more times In the past three months) at 26%, equating to around 12m people; and Germany was next with 11% equating to around seven million people. In Russia less only 1% of the population frequently shops online although it is worth noting this equates to nearly 1.5m people.

“The research also shows online shopping in all three countries is likely to grow in two ways. Firstly, existing frequent shoppers will become heavier purchasers in the next 12 months and secondly, less frequent shoppers will increase their online purchasing as their familiarity increases with the Internet. This is most likely to happen in Russia as the roll out of high-speed internet access becomes more affordable and available. Also many of the respondents stated that they were intending on widening their repertoire of online shopping outlets which means that retailers also need to consider ways of maintaining existing customer loyalty,” commented Gary.

Another key finding which was constant across all three regions was if there were no costs attached to any delivery option the respondents overwhelmingly chose delivery to home over other options, including to a place of work or a retailer for collection. In the UK 85% preferred home delivery, in Germany 87% and in Russia 68% and the figures were almost identical regardless of the value of the item.

The majority of respondents agreed  delivery services were improving and as a result their service expectations were increasing. As a result, the added value services that were preferred across the three countries include the ability to specify more time slots, regular communication from the driver and retailer and parcel tracking. In addition nearly a third of respondents said they would like Sunday deliveries.

“I was a little surprised by how high the figures were in favour of home delivery especially since click and collect has seen such strong growth but it does suggest this service is purely price driven. As always consumers want convenience and certainty when it comes to getting their parcels and if they can get that from a home delivery service it seems that there is no contest,” said Winter.